Sunday, January 22, 2012

DLD 2012 – @Jack Dorsey: “Twitter Has A Business Model That Works”

Earlier this fine Sunday afternoon, Twitter and Square founder Jack Dorsey took the stage at the DLD Conference, the annual pre-Davos meeting of minds held in Munich, Germany.
In an interview with not one but two journalists (Holger Schmidt from FOCUS Magazine and Techonomy’s David Kirkpatrick), Dorsey talked a great deal about Twitter and a little bit about Square.
Dorsey didn’t reveal anything spectacular about either company, emphasizing once more how Twitter is not your traditional social network (here’s my counterpoint) and that its business model works, thanks very much for asking.
He also talked about how Square is looking to expand outside of the United States and why 2012 will be a pivotal year for Twitter in Germany.
Below are my notes – some of Dorsey’s responses are slightly paraphrased.Let’s start by talking about the platform wars. How do you see the future role of twitter compared to Facebook, Google+ and other social networking services?
Twitter is different because we’ve always been about hosting public conversations, that are real-time to boot. There’s always been this perception that you need to tweet to use Twitter, but we see a huge number of people using it for the discovery of news, events, content and so on. Our focus on simplicity is another differentiating factor.Some people say Google+ is more of an attack on Twitter than on Facebook. Do you look at it that way?
We have concerns about building and growing Twitter, not so much about competitors. We want to get Twitter into more markets, so more people use it. Google has a lot of evolutions to go through, with search slowly becoming replaced by apps, the rise of social and whatnot. But again, social for us is only one part of what people use Twitter for, and we see the service more as an information utility.
Twitter was obviously born from a blogging-centric mindset, but where we shine is real-time discovery, being able to open up Twitter and instantly see what’s going on in the world, or with your friends and family. When we recently redesigned the website, we focused a lot on the discovery part of the equation, making it very simple for people to get value out of Twitter without necessarily participating.Twitter has just acquired Summify, a startup that built technology for filtering relevant news. Is this an important area for Twitter, helping people overcome information overload?
Our goal is delivering relevant content to people, instantly. This sounds simple but is in fact extremely complicated to pull off in real-time. We want to bring you closer to what’s happening in the world, and we have a lot of work to do – Summify will help us in that regard.Should we expect more acquisitions?
We’re always looking for amazing teams, and we can get them by acquiring companies, then why not?In the long run, is Twitter going to become a destination for information, or a distribution channel that brings traffic to other websites?
The beautiful thing about the service is that it is both. The most amazing thing about Twitter is that it reaches every single device on the planet, from the cheapest phone to the most advanced smartphone. We’re not just about distribution, but also about people sharing content on Twitter.
(Dorsey brings up the Hudson river plane crash incident as an example of content that was shared first on Twitter sparking an international conversation.)Yes, ok, but have you made up your mind about whether you want to be a distribution channel or a destination site?
Well, it’s a blurry line, but in essence we think of every tweet as a destination on itself, while Twitter is also a mechanism for distribution of content.There’s been a lot of coverage of the Internet’s reaction to SOPA and its subsequent delay. Do you think we’re entering a new world of democracy? Will this outpouring of reactions on social networks, effectively changing things, become more common?
Services like Twitter definitely make this more possible, based on immediate feedback, the fact that everyone can give their opinion right away. This way, you get free access to public thoughts, right from someone’s phone.
We see politicians use Twitter to consume real-time conversations. It’s mind-blowing. Question is what do we do with that information? I’m a believer that if you give people data and information, it will help them make better decisions.
Twitter in that sense can really help the world, allow us to have better conversations, get a better grasp of how people approach the world, their trials and tribulations.It look a long time for Twitter to develop a business model, and it’s based on advertising. We can agree that Twitter is big in perception but comes up short when it comes to engagement and stickiness. Do you need the same level of engagement other social networks enjoy to make your business model work?
Twitter’s business model has been in development for quite some time, and it works. Advertisers use it and we see them coming back for more. The market has vetted, and confirmed that they want to keep using it. Twitter’s ‘Promoted’ products — including promoted tweets, accounts and trends — are currently seeing 3 to 5 percent engagement.
We’re always looking to increase engagement, but I also think about other things, like that fact that our technology can have a positive impact on the world and how businesses interact with their customers.So what you’re saying is that even with the extremely minimal exposure of ads that you deliver, engagement can still prove sufficient enough to make for lots of revenues down the line?
Absolutely, it’s huge. Every signal that we’re getting from both users and advertising proves to us that people want more of it.What’s more important to you as a business right now: make money or get more users? And you can’t answer both.Both. It’s not really a fair question. We think of revenue as not a destination but as oxygen that feeds the model and vice versa. You can’t build a product without revenue, but you can’t focus on revenue without having a product either. Twitter is an organic system and product. Time and time again, you see companies whose revenue model makes their products better, just look at how Google AdSense improved search.You’re unusual in many ways, but also because you have two fulltime jobs: you’re also the CEO of Square. Is Square coming to Europe soon, and what obstacles do you expect?
We would love to come to Europe and we’re going to work hard this year to get traction outside of the United States. The company has been around for two years, but the product has only been on the market for one year, and we’re seeing massive uptake. We have about a million merchants currently using Square, creating new jobs because of it.
We don’t want to limit ourselves to the US, and we’re looking at other markets right now. Germany, for example, is fascinating for both Square and Twitter. Many people don’t know this, but the first programmer we hired for Twitter, Florian Weber, was based in Hamburg, so we definitely have strong ties to Germany.Interestingly, you just visited China. Twitter is not available there, but will Square soon be?
Square is definitely looking at China. People there use a lot of debet cards, there are lots of sole proprietors, but the tool that’s lacking is a way for them to handle payments. We’re looking all over Asia for opportunities.In Germany, Twitter is struggling with low adoption rates. What do you plan to do about that?
We’re currently building a team here in Germany. We also plan to have lots of conversations with local entrepreneurs, engineers and press to develop the system so anyone can use it in Germany. This will certainly be a pivotal year for Twitter in Germany.